ALBA, Italy -- For 60 years, this medieval town east of the Italian Alps has been the uncontested capital of the white truffle, a pungent-smelling tuber that is one of the world's most expensive delicacies.

Alba's market, set in a square at the center of town, is the white-truffle equivalent of the Big Board -- the best place for buyer and seller to connect. And on fall weekends, the market's center, known as "the Ring," is teeming with customers from as far away as Tokyo who haggle over a few grams of the precious fungus. A dry summer this year has increased its scarcity and pushed prices as high as $850 for 100 grams -- sometimes twice that for a prized specimen. Beluga caviar, by comparison, at around $720 for 100 grams, seems cheap.

WSJ's Gabriel Kahn reports on the lucrative market for white truffles, an expensive delicacy found only at certain times in Italy and a sliver of the former Yugoslavia.

Alba always gets the best prices. Last year, the city sponsored a televised charity auction for a 1.5 kilogram white truffle that was bought by a Hong Kong real-estate tycoon for $160,000. Another auction is set for Sunday.

"We have the best, biggest and most professional truffle market in the world," boasts Mauro Carbone, director of Alba's NationalCenter for Truffle Studies. "No one else can come close."

Truffles have also become the economic juggernaut of this town of 30,000. About $1.5 million worth of truffles were sold in October, the peak season. All that truffle-trading led to more than $35 million in hotel and restaurant revenues.

But Alba's preeminence has planted spores of envy. Other parts of Italy, having gotten a whiff of Alba's success, now want to win back some of the lucrative market for themselves.

"We have always been the serfs of Alba," says Maurizio Bazano, head of the truffle-hunters' association in Italy's northwestern Liguria region. He complains that top-notch white truffles from Liguria are shipped up to Alba, where they are sold as "tartufi bianchi d'Alba," robbing his region of fame, and a small fortune.

"That's simply the nature of the market," replies Alba's Mr. Carbone.

Halfway down the Italian peninsula, in the remote medieval town of Gubbio, local officials have been struggling in vain for years to grow their own brand of truffle tourism.

It's not for lack of supply. The pristine woods around Gubbio are fertile ground for white truffles, and 2,400 of the area's 57,000 inhabitants are licensed truffle hunters.

The problem? "We have more truffles, but Alba has the better market," says Ermanno Rosi, an agronomist who runs the local government's truffle department.

Gubbio worked with Italy's national research institute to try to map the DNA of its local truffle to prove that it was genetically unique. That might have qualified it for a prestigious European Union label conferring on Gubbio a special label for its truffles. But after six years of research, scientists never reached conclusive evidence.

So Gubbio launched another plan to create a detailed map of its best truffle-producing woods by crossing forestry records, private property deeds and plant-life studies. Truffles grow near the roots of certain trees, often just below the surface. And truffle hunters need trained dogs to sniff them out. The map was aimed at helping tourists nose around the best trees.

But that also hit a snag. Local truffle hunters wouldn't let slip where they dig up their bounty for fear of tipping off rivals. "There is intense jealousy," says Mr. Rosi, the agronomist. "They won't tell us a thing!"

Also struggling is a plan to get everyone in Gubbio involved in the local truffle business -- from hunters to wholesalers and restaurants -- by introducing a special "Gubbio white truffle" label. It turns out there is a vibrant black market in white truffles, so few buyers and sellers want to come forward for fear of attracting the tax man.

Gubbio's truffle merchants have enjoyed some moments in the spotlight. Last year, when a hunter came across a prime half-kilo white truffle in central Italy, word quickly spread. Emanuele Musini, who runs a company that exports white truffles, got tipped off by a phone call, and told one of his drivers to race to the site of the find and offer a premium price: €4,000, or about $5,800. Before the truffle reached his office, he had already sold it for €8,000 to a wealthy German who was planning a banquet.

From Gubbio, the truffle then traveled to Rome, where it made a brief appearance on Italy's national morning news show, before boarding a plane for Germany. "You have to move fast. Truffles lose 3% of their weight a day," says Mr. Musini, "and at these prices that's a disaster."

But most often, prize truffles wind up in Alba, where there is a cadre of ready buyers.

Over the years, Alba has labored to professionalize the truffle trade to keep demand -- and prices -- high. The city has a top-flight truffle-research center. It publishes weekly average prices on its Web site http://www.tuber.it and offers comparisons with historical prices. A panel of experts inspects each white truffle before it goes on sale at the market to certify authenticity and quality. Alba even has a customer-complaint window which can issue refunds to truffle buyers who claim they've been wronged.

In the "Ring" at the Alba market, Tohomisa Kida, a Tokyo native who works for an ad agency in London, was poking his nose into rows of small white truffles. Nearby, Turin retiree Vito Ruisi sniffed a dozen tubers before haggling down the price of one 15-gram piece -- enough to season a dinner for one -- to €40 and sealing the deal.

The tuber magnatum pico is found only in Italy and in a sliver of neighboring Slovenia and Croatia, and it grows for just a few months of the year. It is much rarer, more aromatic and many times the price of its more common cousin, the black truffle.

Despite soaring prices, top chefs around the world covet the white truffle. And the world's fanciest restaurants use the white truffle in the simplest fashion, shaved over risotto or pasta.

"It's like eating an extinct animal," says Fernando Stovell, chef at the Cuckoo Club, a private eating club in London.

Alba didn't win its truffle title overnight. In the 1940s and '50s, a local hotel owner began sending the largest truffle he could find each year to celebrities. Among the recipients: Marilyn Monroe, Alfred Hitchcock and President Truman, who got the largest white truffle in memory, 2.5 kilos.

The publicity stunts helped put Alba on the map. But locals have also devoted time and resources to discovering the secrets of the white truffle. The city's NationalCenter for Truffle Studies recently cordoned off 16 stretches of woods to conduct experiments on how temperature, rainfall and other factors affect truffle growth. Alba also has a "dog university" where people can get their puppies trained in the art of truffle hunting.

Isabella Gianicolo, one of the center's researchers who wrote her university thesis on truffles, was in her office recently, studying a Web site with recent prices paid for truffles at the Alba market. Prices have exceeded €600 for 100 grams, approaching the €700 record set in 2003. But speculation among buyers is currently so high, she says, that even if white truffle supplies were suddenly to increase, prices would hold. "It's a free market," she shrugs.